Morning Market Internals

NYSE Composite Index:

• Volume Running +.5% Above 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 54.8% of Issues Advancing, 41.7% Declining
• 131 New 52-Week Highs, 9 New Lows
• 57.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.5%
• Vix 11.3 -3.2%
• Total Put/Call .96 +37.1%
• TRIN/Arms 1.4 +17.8%

Thursday Watch

Evening Headlines

Bloomberg:

• A New Baby Boom Is Happening in China's Smaller Cities. China’s smaller cities are struggling to cope with a baby boom after the nation ended its one-child policy in 2015, demonstrating that it’s too early to further relax the new two-child ceiling. So says lawmaker Sun Xiaomei, who criticizes calls for an immediate easing of the current two-child policy, and says her visits to small cities and towns showed her that already-stretched hospitals, pediatricians and kindergartens are finding it hard to cope with increased births.

• Most Asian Stocks Climb After Fed; Dollar Drops. Most Asian equities followed U.S. stocks higher, after Treasuries rallied and the dollar tumbled as the Federal Reserve raised interest rates without accelerating its timeline for future tightening. Shares from Australia to South Korea climbed after the S&P 500 Index jumped by the most in two weeks. Japanese stocks slipped as the yen strengthened ahead of the Bank of Japan’s policy decision Thursday. The yield on 10-year Treasury notes tumbled below 2.5 percent while gold and oil climbed. The euro rose to a one-month high after Dutch Prime Minister Mark Rutte’s Liberals easily beat the anti-Islam Freedom Party of Geert Wilders. The kiwi fell as New Zealand’s economy grew less than economists forecast. The MSCI Asia Pacific Index rallied 0.8 percent as of 9:14 a.m. in Tokyo, poised for the highest closing level since July 2015. South Korea’s Kospi jumped 0.9 percent. Australia’s S&P/ASX 200 Index rose 0.4 percent and New Zealand’s S&P/NZX 50 Index increased 0.7 percent. Japan’s Topix fell 0.3 percent, dropping for a third straight day as banks and insurers led declines.

• Fed's Nod to Gradual Pace Reshuffles Stock Leaders as Rates Rise. The stock market rallied after the Federal Reserve made it more expensive to borrow money for the second time in three months. Wait, what?

Wall Street Journal:

• Fed Raises Interest Rates, Remains on Track to Keep Tightening. As in December, officials penciled in three quarter-point rate increases this year. The Federal Reserve said it would raise short-term interest rates a quarter percentage point and keep lifting them later this year, signaling the central bank is moving into a new phase in which it will more aggressively withdraw easy money from the financial system as the economy improves.

• Lawmakers Promise Results Soon on Wiretap and Election Probes. Top Republican and Democrat on House intelligence panel repudiate Trump’s accusation. Lawmakers of both parties on Wednesday promised the public would soon get a more detailed look at the progress of several investigations into the 2016 presidential campaign, including a definitive answer to whether any evidence exists for President Donald Trump’s unsubstantiated allegation that he was wiretapped by his predecessor.

• The Republican ObamaCare Choke. If they blow health-care reform, why would anyone vote Republican again?

Fox News:

• Fox News Poll: Trump approval slips, even as more feel economy improving. (video)

• Federal judge in Hawaii puts Trump travel ban on hold. (video)

CNBC:

• After-hours buzz: ORCL, GPRO, WSM & more.

• Canada Goose IPO expected to price above range.

Zero Hedge:

• Startled Reporter Asks Why Yellen Hiked With GDP And Real Wages Sliding: Here Is The Response. (graph)

• The US Is About To Hit $20 Trillion In Debt: Here's How It Affects You. (graph)

• Dutch General Election Results: Prime Minister Rutte Wins, Wilders' Freedom Party Slides.

• Executives Abandon Och-Ziff Following $13 Billion In Withdrawals And An 80% Share Price Decline.

• Trump "Dead On Arrival" Budget Plan Proposes 31% Cuts For EPA, 28% For State Department.

• The U.S. Border Tax Would Hit Texas Hard.

• Russian Spy Ship Returns Off US East Coast, Just 20 Miles Away From Georgia Sub Base.

• Tesla(TSLA) Announces $250MM Common Stock, $750MM Convertible Offering, Musk Buying $25MM; Stock Surges. (graph)

• Rate Hike Hammers Dollar; Stocks, Bonds, & Bullion Soar. (graph)

Business Insider:

• Oracle's(ORCL) cloud business pumped revenue and profits past targets and the stock is flying.

• High-frequency trading firm KCG jumped 23% on a report Virtu Financial wants to buy it for $1.2 billion.

Night Trading 

• Asian equity indices are unch. to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 90.25 -2.5 basis points.

• Asia Pacific Sovereign CDS Index 27.25 -.25 basis point

• Bloomberg Emerging Markets Currency Index 71.65 +.06%. 

• S&P 500 futures +.06%. 

• NASDAQ 100 futures +.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DG)/1.41

• (ADBE)/.87

• (JASO)/-.08

Economic Releases
8:30 am EST 

• Housing Starts for February are estimated to rise to 1264K versus 1246K in January.

• Building Permits for February are estimated to fall to 1268K versus 1285K in January.

• Initial Jobless Claims for last week are estimated to fall to 240K versus 243K the prior week. 

• Continuing Claims are estimated to fall to 2050K versus 2058K prior.    

• Philly Fed Business Outlook Index for March is estimated to fall to 30.0 versus 43.3 in February. 

10:00 am EST

• JOLTS Job Openings for January are estimated to rise to 5562 versus 5501 in December.

Upcoming Splits

• None of note

Other Potential Market Movers

• The BoE rate decision, President Trump's budget release, Eurozone CPI report, Australia Employment Change, Bloomberg Economic Expectations Index for March, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (OMI) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Today's Headlines

Bloomberg:

• Trump’s Top Trade Adviser Quietly Seeks an Alliance With Mexico. (video) President Donald Trump’s top trade adviser is quietly working to forge an alliance with Mexico, even as U.S. plans to build a border wall and threats to withdraw from Nafta continue to inflame tensions with its third-largest trading partner. Peter Navarro, who as head of the White House National Trade Council will play a leading role in the effort to re-negotiate the North American Free Trade Agreement, said in an interview the U.S. wants Mexico and Canada to unite in a regional manufacturing “powerhouse” that will keep out parts from other countries.
• U.S. Stocks Rise, Treasuries Rally as Fed Tightens. (video) The Stoxx Europe 600 Index added 0.4 percent as mining companies rallied 1.5 percent as a group.
• Iraq Plans to Boost Crude Oil Production and Exports This Year. (video) Iraq pumped 4.57 million barrels a day of oil in February and plans to boost output later in the year even as the OPEC member reaffirmed its commitment to the group’s decision to cut production to counter a global glut. The country plans to increase output to 5 million barrels a day by the end of 2017, Oil Minister Jabbar Al-Luaibi said Wednesday at a news conference in the southern city of Basra. Iraq exported 3.87 million barrels a day from its southern and northern shipment hubs in February, the ministry’s spokesman, Asim Jihad, said in an emailed statement. 
• Fed Raises Benchmark Rate as Inflation Approaches 2% Target. The Federal Reserve raised its benchmark lending rate a quarter point and continued to project two more increases this year, signaling more vigilance as inflation approaches its target. “In view of realized and expected labor market conditions and inflation, the committee decided to raise the target range for the federal funds rate,” the Federal Open Market Committee said in its statement Wednesday. “Near-term risks to the economic outlook appear roughly balanced.”
• To Protect Climate Money, Obama Stashed It Where It’s Hard to Find. (video) President Donald Trump will find the job of reining in spending on climate initiatives made harder by an Obama-era policy of dispersing billions of dollars in programs across dozens of agencies -- in part so they couldn’t easily be cut. There is no single list of those programs or their cost, because President Barack Obama sought to integrate climate programs into everything the federal government did. The goal was to get all agencies to take climate into account, and also make those programs hard to disentangle, according to former members of the administration. In some cases, the idea was to make climate programs hard for Republicans in Congress to even find. "Much of the effort in the Obama administration was to mainstream climate change," said Jesse Keenan, who worked on climate issues with the Department of Housing and Urban Development and now teaches at Harvard University. He said all federal agencies were required to incorporate climate-change plans into both their operations.

Wall Street Journal:

• Two Russian Spies Charged in Massive Yahoo Hack. Federal authorities have charged four men, one of whom was taken into custody Tuesday in Canada.

Fox News:

• GOP senators ask Tillerson to probe US funding of Soros groups abroad. (video)

CNBC:

• Here's what changed in the new Fed statement. (video)
• Nearly 60 members of Congress are seriously worried about GOP Obamacare replacement. And those are just the Republicans.
• The stock market still isn't accounting for this massive stimulus likely coming from Trump.
• Apple’s(AAPL) growing service business could make stock less of a bumpy ride, analyst says.

Zero Hedge:

• Intelligence Sources Reveal: Obama Used British Agents For Trump Wire Tap Surveillance. Three separate intelligence sources believe that former President Obama veered ‘outside the chain of command’ and employed British surveillance agents to conduct surveillance on Donald Trump’s team prior to the election, according to a legal analyst. Judge Andrew Napolitano revealed on ‘Fox & Friends’ this morning that the sources spilled the details to him as the controversial case continues to dominate headlines. “Three intelligence sources have informed Fox News that President Obama went outside the chain of command,” Napolitano said. “He didn’t use the NSA, he didn’t use the CIA, he didn’t use the FBI, and he didn’t use the Department of Justice.” “He used GCHQ.” Napolitano explained.
• What The "Dots" Say: Fed Keeps 2017, 2018 And Long-Run Rate Outlook Unchanged, Raises 2019. (graph)
• Fed Hikes Rates For 3rd Time In 11 Years, Sees Two More Rate Hikes In 2017. (graph)
• Merkel's Migrant Deception.
• Atlanta Fed Slashes Q1 GDP Forecast To Just 0.9% Hours Before Fed Rate Hike. (video)
• Loonie, Peso Jump After Peter Navarro Says He Wants US, Canadian, Mexican Trade "Powerhouse".
• Homebuilders Have Not Been This Confident Since The Peak Of The Last Housing Bubble. (graph)
• Canada Flagged For Recession By BIS.
• Numerous High-Profile Twitter Account Hacked, Post Swastikas, Pro-Erdogan, "NaziHolland" Messages.
• Trump Nominates Another Goldman Banker For Key Treasury Position.
• What Wage Growth? Real Earnings Tumble For Second Straight Month. (graph)
• Retail Sales Decelerate, Rise 0.1% As Expected; Control Group Disappoints. (graph)
• Stagflation Strikes As US Consumer Prices Surge At Fastest Pace In 5 Years. (graph)

Reuters:

• China iron ore jumps 5 pct as steel races to 3-yr high. Iron ore futures in China surged more than 5 percent on Wednesday as steel prices rose to their strongest in more than three years on hopes of firm demand as Beijing spurs infrastructure spending and property sales rise.

Bear Radar

Style Underperformer:

• Large-Cap Growth +.3%

Sector Underperformers:

• 1) Disk Drives -.2% 2) Social Media -.1% 3) Computer Services -.1%

Stocks Falling on Unusual Volume: 

• FTD, TWI, AKAO and EDIT

Stocks With Unusual Put Option Activity:

• 1) HCA 2) SNAP 3) MON 4) DISH 5) PAY

Stocks With Most Negative News Mentions:

• 1) FTD 2) RUBI 3) TOPS 4) TTOO 5) NSC

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.9%

Sector Outperformers:

• 1) Gold & Silver +2.7% 2) Steel +2.1% 3) Airlines +2.0%

Stocks Rising on Unusual Volume:

• MSCI, CBF, JOBS, OFIX, TGTX, ORA, HTHT, LMAT, CLVS, ZTO, MGI, LBTYA, CYTK, BIO, AMPH and A

Stocks With Unusual Call Option Activity:

• 1) SGYP 2) FL 3) HAL 4) COH 5) USB

Stocks With Most Positive News Mentions:

• 1) A 2) LLNW 3) HOG 4) FLS 5) FNSR

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -16.3% Below 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 72.8% of Issues Advancing, 23.5% Declining
• 76 New 52-Week Highs, 18 New Lows
• 52.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.9%
• Vix 11.8 -3.7%
• Total Put/Call .99 +6.5%
• TRIN/Arms .96 -30.0%